Comments on: How do you price a mobile banking service?

By: financial24

financial24 — Fri, 14 Aug 2009 19:35:22 +0000

South Africa’s cabinet approved a suspension on the disposal of mining assets currently held by state entities, government spokesman Themba Maseko said on Thursday .
Maseko said at a post-cabinet briefing that the moratorium was intended to provide the minister of mineral resources adequate time to conduct and finalise an audit of mining interests held directly or indirectly by the state .

By: Banca Movil: ¿Que precio utilizar? | bancarización | ebanking.cl

Banca Movil: ¿Que precio utilizar? | bancarización | ebanking.cl — Wed, 17 Sep 2008 14:45:29 +0000

[...] bancarización Publicado por Juan Pablo Traverso (jtraverso) , (Leida 1 veces) En un interesante artículo publicado en el sitio de la CGAP. el autor Jim Rosenberg se refiere a las principales estrategias [...]

By: Michael

Michael — Fri, 12 Sep 2008 09:16:38 +0000

I think one point these comparisons miss out is the non-bank alternatives that these people have used before the advent of m-banking. Domestic remittances are very often done in person- either by the person themselves getting onto a bus / shared taxi and going to the province, or giving the money to a taxi driver and letting them take a hefty commission. m-banking can be substantially cheaper, safer and quicker. Comparing to bank prices is not the whole picture.

By: john

john — Tue, 09 Sep 2008 17:49:30 +0000

From where is India starting? Say as a percentage of all private consumption (informal and formal), what percent of payments are done in cash (i.e., paper and coin currency) vs other?

By: Esquemas de precios para m-banking « Telefonía Móvil y Acceso a Servicios Financieros en América Latina y Caribe

Mon, 08 Sep 2008 02:56:31 +0000

[...] Enríquez Hace unas semanas Jim Rosenberg publicó en el blog de CGAP una interesantísima entrada sobre los esquemas de precios empleados en las distintas plataformas de m-banking dirigidas a población de la base de la [...]

By: ali

ali — Tue, 02 Sep 2008 06:10:04 +0000

Can you also elaborate how the banking agents are compensated. 1% seems a very low margin. Essentially, these agents are ‘selling deposits and withdrawals alongside toothpaste’. The margin on toothpaste is between 5 to 15%

By: Marina

Marina — Fri, 29 Aug 2008 09:23:06 +0000

The cheaper prices you have analysed above have been achieved through innovation and competition and notably without regulatory intervention such as price regulation. This is the most effective way to reduce prices. I would expect the trend to reduced prices to increase over time as more and more providers enter the market and competition increases.

In the EU price regulation can only be justified when the regulated entity has significant market power, which means some sort of monopoly where others have no incentive to compete or when the entity is showing abusive behaviour.

What worries me with discussions about price caps is that in countries where competition laws are not enforced or used, very idealistic regulators with strong and good intentions on banking the unbanked could opt for price regulation.

The temptation is very high because such a move looks good from a ‘banking the poor perspective’, but the actual effect would be detrimental for the consumer as price caps would reduce the incentive for the industry to enter the market in the first place.

You also seem to assume that there is an optimal pricing model, which we (consultants and development agencies) need to find. I would challenge this assumption by saying: in reality there have to be very different pricing models, which serve different consumer groups, in different national environments. There are many options which can ultimately benefit the poor, but they will emerge through competition, innovation and the commercial incentive to crack that bottom (middle and top) of the pyramid.

By: Kaberia

Kaberia — Wed, 27 Aug 2008 07:35:43 +0000

While price may be on of the most important components in attracting the lower segment of the market into adopting m-banking, it is not the only one. Another issue especially here in Kenya would be technological wariness where we have clientele who only believe that transactions can be done via face to face interation with a bank rep. It will take some time for this lower end of the market to be sufficiently elightened to embrace technology.

By: Micro-finance, mobile-banking et télécoms en Afrique « Génaf

Micro-finance, mobile-banking et télécoms en Afrique « Génaf — Tue, 26 Aug 2008 23:03:40 +0000

[...] et nécessitent de se rendre jusqu’à une agence d’une banque de temps en temps). Dans l’article que je vous propose sur le blog CGAP, les auteurs montrent qu’on en est encore aux [...]

By: Jayesh Sharma

Jayesh Sharma — Tue, 26 Aug 2008 04:43:36 +0000

Hi Jim,

I could not agree more with you. Globe and some other Mobile operators ( Operators) in Asia Pac and Middle East have to pay their distribution channel as high as 20% of the Air-time value as channel commissions. This amount can be effectively used to “cross subsidize” other wallet services by such operators.

However in a market like India, the retail distribution commissions are as low as 2.5% and therefore using Air-time to cross subsidize other wallet services could prove to be a challenge. I also think that the “cross subsidization” model of G Cash is being done at the expense of the existing retail channel margins. Once the Wallet reaches a decent consumer penetration and once the Air-time top ups through the wallet in number of transactions start matching the number of transactions of Air-time top up done through the retail channels, the retailers will see a drop in their earnings (Return on Investment) when reselling Air-time.

I have been looking at the pricing issue from a slightly different perspective ( however leading to almost the same thought process as i am led to by your article) of “cost of funding the wallet” versus” earning from the services offered through the wallet”. Given the Mobile Operators requirement of maintaining their EBIDTA that they are used to for other Telecom services (20%-40%), operators in Asia Pac and Middle East have been wanting to know if the Wallet Services could help them earn (Directly & indirectly) as much as the other telecom network services. I think the answer may be, as you have suggested, in being able to create different baskets of wallet services for different consumer segments. The BPL (below the poverty line) segment wallet can comprise of basic services that will not earn the operator the expected “Telecom services” margin and the basket for the richer consumer segment could have services whose earnings could more than compensate for the lack of earnings from the services in the “ BPL Basket”.

Interestingly the service of Remittance is looked at as a “Service by the sending wallet” and as a “source of funding by the receive wallet” and we are coming across some interesting perspectives on pricing and sharing remittance transaction costs especially when the “send wallet” and “receive wallet” belong to different mobile operators.

Thank you for very much your insights and the research data.

Best Regards

Jayesh Sharma
Business Development- Middle East & Asia Pacific
Mobile Money Remittances & Mobile Wallet Team